# Inventory Turnover

Date created: Oct 12, 2022  •   Last updated: Sep 14, 2023

## What is Inventory Turnover?

Inventory Turnover measures how often, in a given time-period, your organization is able to sell its entire inventory. Inventory Turnover is an important efficiency metric and is helpful in analyzing pricing, product demand, and, of course, inventory purchase and costs. It is also a critical tool when selling perishable goods, where the potential for waste is high.

### Inventory Turnover Formula

ƒ Sum(COGS) / ((Beginning Inventory Value + Ending Inventory Value) / 2)

### How to calculate Inventory Turnover

If a clothing retailer generates \$1M in sales each month, with \$400K in Costs of Goods Sold (COGS), and the start of the month inventory was valued at \$45K and closed at \$55K; Using the Sales method, Inventory Turnover = \$1M / (( \$45K + \$55K ) / 2 ) = 20X per month Using the COGS method, Inventory Turnover = \$400 / (( \$45K + \$55K ) / 2 ) = 8X per month

### Start tracking your Inventory Turnover data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data.

### How to visualize Inventory Turnover?

Use a summary chart to visualize your Inventory Turnover data and compare it to a previous time period.

### Inventory Turnover visualization example

Inventory Turnover

15X

1.10

vs previous period

#### Summary Chart

Here's an example of how to visualize your current Inventory Turnover data in comparison to a previous time period or date range.

Inventory Turnover

#### Chart

Measuring Inventory Turnover